What seemed unthinkable only a few weeks ago is now happening. European leaders are set to seal the appointment of Jean-Claude Juncker as the next President of the European Commission on Friday, leaving the UK diplomatically isolated. Now what?

Credibility is everything to central bankers. Their ability to guide the economy hinges on public confidence that they say what they mean and will do as they say. With credibilty, a central banker can have great impact without doing very much. Just look at what Mario Draghi has been able to achieve simply by promising to do whatever it takes to save the euro. Without credibility, the central bank’s ability to influence the spending and investment decisions of millions of businesses and households is likely to be badly constrained.

This isn’t a situation the ECB ever wanted to find itself in. At a time when the U.S. and U.K. are debating when to tighten monetary policy, the ECB will, on Thursday, have to explain how it plans to loosen it.

A popular explanation for rising prices in the U.K. is that they are driven by a lack of supply. However, an economics consultancy notes that the number of houses in the UK rose by 0.6% in 2012, which is exactly the same as the rise in the population. Indeed, on a per-capita basis the quantity of housing in the UK has been stable for the past 15 years. It also argues that if there was a real shortage of housing in the UK, one would expect to see rents rising rapidly in real terms. But they’re not: in the year to the end of March 2014, rents rose by just 2.2%, according to the Office for National Statistics.

Now that the European elections are over, let the real politics begin. The results confirm what was already known: that the long recession has undermined support for mainstream political parties and the European Union.

George Osborne has taken to the pages of the WSJ to take his revenge on the “pessimists” who attacked his economic strategy by arguing that fiscal consolidation was incompatible with economic recovery. Chief among those critics was the International Monetary Fund which last year accused the U.K. finance minister of “playing with fire” for pushing ahead with his austerity policies. In fact, the U.K. recovery started almost the moment the forecasts were made; the IMF is now predicting the U.K. will be the fastest growing country in the Group of Seven leading industrial nations in 2014.

Greece’s return to the bond markets, almost unthinkable just a few weeks ago, has been an astonishing success. The country at the epicenter of the euro crisis for the last four years has managed to raise €3 billion for a five-year bond at a yield of just under 5%, having received more than €20 billion of demand. That is a remarkable vote of confidence by the markets in Greece and the euro zone and an eloquent rebuke to all those economists and commentators who have consistently predicted that Greece would be forced to quit the euro or face social and political collapse.